Short answer: A special assessment is a request for additional money beyond the monthly condominium contributions due.
There are various circumstances that may require a Special Assessment, but the most likely is if major or urgent repair or replacement expenses for the common property need to be funded and there is not sufficient money in the Reserve Fund, the Condo Board must levy a Special Assessment so that all the Unit owners contribute their fair share of the funds needed to deal with the problem.
What is a Reserve Fund?
Tehnically called the Capital Replacement Reserve Fund, it’s created from a portion of the Condominium Fees that’s paid by all the Unit owners. It’s set aside and managed by the Condominium Corp. to pay for major repairs or the replacement of common property elements.
Condo’s are required to have a Reserve Fund Study completed every 5 years in order to create a Reserve Fund Report, and Plan.
As was mentioned in my blog article: Buyer’s Guide: Condo Documents, Get them Reviewed! the Reserve Fund amount, Report, and Plan are part of the Condo Document package that you are provided with prior to your purchase of a condo. You can see why it’s imperative to look these over with a professional Condo Document Review company to see the financial shape of the corporation. The healthier the Reserve Fund, the more of an unexpected crisis the Condo’s bank book can handle, and hopefully won’t result in a Special Assessment.
When Condo Owners Strike Back
Interesting legal case of what transpired between a group of condo owners and the developer of the condo: read it here
Some ‘Special Assessment’ News Articles
November 22, 2008 – Calgary Herald
Buyer faces extra costs after purchasing condo unit
February 21, 2008 – Calgary Herald
Soggy condo owners face $10M repair bill